Spyware firms pay token fines to FTC

Can't pay, will only pay $50K

Two alleged spyware operations have settled lawsuits brought by the US Federal Trade Commission.

Odysseus Marketing and its principal, Walter Rines, along with John Robert Martinson, the principal of Mailwiper, and its successor, Spy Deleter, have agreed to be bound by injunctions against exploiting security vulnerabilities to download software or misrepresenting the purpose of their wares. In addition, the operators agreed to pay a combined total of $50,000 in fines, a modest total that's unlikely in itself to deter anyone else contemplating by violation of US federal anti-spyware laws.

Odysseus marketed a program called Kazanon that purportedly allowed consumers to engage in anonymous peer-to-peer file sharing. According to the FTC, the package was loaded with spyware that snooped on user's surfing habits, manipulated search results and bombarded punters with intrusive pop-up ads. Odysseus also allegedly exploited browser vulnerabilities to dump its crud on user's desktops. The FTC settlement obliges Odysseus to destroy the personal information of users it collected. The FTC wanted to fine Rines $1.75m for his firm's anti-social behaviour but because he's broke it will collect $10,000. The rest of the fine is suspended.

Mailwiper punted bogus anti-spyware products marketed under the names Spy Wiper and Spy Deleter. Affiliates of the firm, including infamous former spammer Sanford Wallace, exploited IE vulnerabilities to distribute spyware to promote the product, the FTC alleges. The settlement also imposes a $1.86m judgment on Martinson (Mailwiper's main man) which is suspended, except for $40,000, based on his inability to pay. Wallace was previously fined $4m over his role in distributing Spy Wiper and Spy Deleter, products which failed to live up to their promises of cleaning up infected PCs.

Zango and cash

In the case of both settlements, neither defendant has admitted any wrongdoing. The closure of the cases against Odysseus and Mailwiper are the latest in a string of enforcement actions brought the FTC against spyware outfits.

The effectiveness of these spyware lawsuit settlement has been called into question after security researchers unearthed evidence that infamous adware firm Zango (the former 180solutions) was up to its old tricks just two week after it settled adware distribution charges with the FTC.

Zango admits to problems in the past but claims to have cleaned up its act since the start of the year. However, spyware watcher Ben Edelman has published a study explaining that deceptive installs of Zango software continue to take place. Following its own investigation, the Center for Democracy and Technology has filed a fresh complaint (PDF) about Zango to the FTC. ®